Reuters blog archive

from Breakingviews:

GM can find small comfort in Toyota’s ride

By Kevin Allison
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

General Motors can find some small comfort in Toyota’s recall ride. Before Chief Executive Mary Barra was hauled up to Capitol Hill on Tuesday, the U.S. automaker summoned more vehicles back into the shop and doubled the estimated cost of fixing safety issues in the first quarter. Toyota’s expensive accelerator fiasco suggests GM’s costs will probably rise from here, but ultimately the financial fallout should be manageable. Culture may be the harder repair.

The problems that afflicted Toyota from 2009 to 2011 have cost at least $3.2 billion so far. That includes the $1.2 billion Toyota agreed to pay last month to settle a Department of Justice probe, $1.1 billion in recall-related expenses that Toyota estimated in 2010 and roughly $900 million of lost sales. Omitted is the cost of ongoing civil litigation and harder-to-measure items like any possible damage to Toyota’s reputation. The sum is nevertheless a safe starting point for GM.

To date, Toyota’s recall has cost it 1.5 percent of 2013 sales. If GM’s experience is similar, its costs before civil litigation would amount to about $2.3 billion, or three times the upwardly revised figure GM just released as an estimated first-quarter charge.

from Global Investing:

Route 312 – China’s Route 66

The world's largest car market, China, with a population of 1.3 billion people and an emerging middle class, holds great potential for investors and consumers alike with annual growth rates in the auto sector expected to hold at around 23 percent to 2017, according to Alliance Bernstein Asset Managers.

Joint ventures (JV), the most popular structure for foreign firms investing in the automobile sector in the world's largest car market, are set to capitalise on a growing consumer base in a country with 3.3 million kilometres of asphalt. Traversing the so-called 'mother' road 312 (China's route 66) is becoming more of an attainable dream for the Chinese consumer.

from Breakingviews:

U.S. auto sales put brakes on economy’s detractors

By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

U.S. car sales are putting the brakes on the economy’s detractors. Americans are buying more vehicles thanks in part to pent-up demand and cheap loans. But the housing recovery helps, too. That and other economic data suggest consumers are looking beyond slimmer paychecks. Federal spending cuts allowing, that means the U.S. engine may be about to purr.

from Breakingviews:

New recall narrows Toyota’s recovery window

By Wayne Arnold

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It may take just 40 minutes to replace the gizmo responsible for Toyota’s latest embarrassment, but with 7.4 million cars to fix, that’s 565 years of mechanic time. Actually it is neither the first nor the most serious of Toyota’s recent difficulties. But the Japanese automaker’s problems are beginning to look unending.

from Breakingviews:

Japan Inc’s earnings tell worrisome global story

By Wayne Arnold

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

At first glance Japan Inc’s earnings look dazzling. Operating profits at the country’s four biggest manufacturers quintupled in the latest quarter, relative to same period last year. Growth in the U.S. and a post-tsunami rebound in Japan overwhelmed the drag from weaker economies in Europe and China. But the message is actually more sobering: the buffer from such slow-growth economies is unlikely to last.

from Photographers' Blog:

Crash test for dummies

At Toyota Motor’s safety technology media tour on Thursday, the most photogenic objects were not the cars; they were the crash-test dummies. Throughout the day at the Higashifuji Technical Center at the foot of Mount Fuji, Toyota showed us its latest safety features and research facilities, including a head-on collision between a Vitz hatchback and Toyota’s flagship Crown sedan, and a driving simulator that would make NASA proud.

Among the high-tech safety gadgets were the 21 crash-test dummies, lined up neatly in a row, with names like Bio RID II, SID-IIS and THOR. The dummies come in all sizes and shapes to simulate the impact on drivers and passengers from 6-month-old babies to pregnant women. (She comes with a mock uterus with built-in sensors.)

from Raw Japan:

Yes, there is a difference between American and Japanese cars

By Bob Lutz
The opinions expressed are his own.

A lot of words have been written in the past few post-tsunami weeks about the negative impact of the disastrous tragedy on the short-term future of Japanese cars in the U.S. market. In parallel, many articles proclaim this to be a “historical window of opportunity” for the “Detroit Three,” now able to deliver to waiting customers an abundant supply of new vehicles while, at Toyota, Honda and Nissan, the cupboard is bare.

It’s telling that we’re *not* hearing the Japanese-brands inspired propaganda offensive of a few years back, when the media duly repeated that “there is no longer such a thing as an American car or a Japanese car.” The Japanese, it was stated, now all have plants in the U.S., whereas most U..S companies import components from the Far East, or Latin America,  thus compromising the promise of saving U.S. jobs. For buyers with a patriotic streak, it was all-American-apple-pie-OK to buy a Japanese brand, these being “just as American” as a Ford, Chevrolet, Dodge or Jeep. The (then) World’s Smartest and Finest Car Company, Toyota, even placed ads asking who’s more American? Toyota USA, adding manufacturing jobs and plants in the U.S., or the Detroit Three, busily, at that time, laying off workers and shuttering plants?

from Gregg Easterbrook:

Cars on the catwalk

Every year at New York’s Fashion Week, models strut in dresses that are flamboyant, expensive and wildly impractical. The concept cars on display annually at the North American International Auto Show are the same, only made of metal rather than fabric.

Hardly anyone ever wears the dresses flashed during Fashion Week, except perhaps on television shows. Hardly anyone ever drives concept cars. Marketability is not the point. The point is to generate excitement about product lines, drawing buyers to department stores, or automobile showrooms, to purchase the sensible wares.

from Shop Talk:

Check Out Line: Retailers don’t see yuan move as all bad

yuan1Check out what retailers are thinking about China's revaluation of the yuan.

Western retailers may pay more for goods they import from China as the yuan appreciates, but the flip side is that the move may create significant selling opportunities by putting more money in the pockets of consumers in the world's biggest market. 

Executives at the Reuters Consumer and Retail Summit took solace in the idea that any appreciation following China's weekend statement it would let the yuan appreciate against the dollar would likely be gradual.
They also see room to move more manufacturing out of China and into other countries with lower labor and other costs.
"I don't think that there is any sense that there is going to be any immediate impact ... The open question is how quickly and how far they'll actually let the currency revalue," said Matthew Shay, president and CEO of the U.S. National Retail Federation, a retail trade group. 
Some retailers will see margins hit because their goods manufactured in China will be more expensive in dollars or euros. Retail stocks dropped more than the broad market on Monday in the wake of the yuan announcement.
Beyond the retail industry, the yuan's move is expected to help companies that supply commodities or heavy equipment to China's fast-growing economy, like Caterpillar, and other foreign brands that source and sell goods locally, such as fast-food operator Yum Brands, the parent of KFC.

from DealZone:

Love is all around in Toyota-Tesla deal

The stunning romance between global auto giant Toyota Motor Corp and Silicon Valley startup Tesla Motors began like a Hollywood tale -- with a date in a fast car.

"I received a call that Mr. Toyoda was interested in meeting with me the next time he was in California, and I said that sounded great," Elon Musk, chief executive of Tesla said.